SoftBank Sinks 8.8% as AI Stocks Rout Hits Asia

SoftBank fell about 8.8% and Japan's Nikkei 2.6% on Oct. 13 as an AI stocks selloff spread across Asia on worries over AI financing and chip competition.

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Asian technology shares fell sharply on Tuesday, Oct. 13, as a rout in U.S. semiconductor stocks spilled into regional markets. SoftBank Group (9984), the Tokyo-listed investor with heavy exposure to the AI industry, sank about 8.8%, and the Nikkei 225 closed down about 2.6% after trading above 68,500 at the open. The selloff in AI stocks was driven by concern over how the industry will pay for its infrastructure and by fresh competition in memory chips.

What Happened in Asian Markets on Tuesday?

Asian markets sold off across Japan, South Korea and Taiwan, with chip makers and chip equipment suppliers taking the heaviest losses. The Nikkei opened 0.68% lower and widened its decline through the session, while the broader Topix fell far less, which shows how concentrated the damage was in AI-linked names.

In Japan, chip equipment maker Tokyo Electron (8035) dropped about 6.6% and testing-equipment maker Advantest (6857) fell more than 5%. Memory maker Kioxia slid by nearly 10% in early trade.

In South Korea, SK Hynix, the leading supplier of high-bandwidth memory used in AI accelerators, fell more than 8%. Samsung Electronics shed about 7.9%. Both touched their lowest intraday levels since August, and the Kospi dropped more than 4% in early trading. Taiwan's Taiex fell about 1.9%, with TSMC (TSM) down about 1.6%.

Why Are AI Stocks Under Pressure?

AI stocks are under pressure because investors are weighing two threats at once: rising doubts over how AI capital spending will be funded, and new competition in memory chips.

The Wall Street session on Monday set the tone. The Philadelphia Semiconductor Index fell 2.7%, its fourth consecutive losing session. Memory names led the decline. The Micron Technology stock (MU) lost 3.9% and SanDisk (SNDK) dropped 6.0%. Micron's slide followed progress reported by China's ChangXin Memory Technologies on a new memory-cell structure that lets chips store more data in a smaller footprint, which raises the prospect of lower-cost rivals to established producers.

Why Does AI Financing Matter So Much to SoftBank?

SoftBank is among the most leveraged public expressions of the AI buildout, so any doubt about funding hits it harder than most. The company has committed tens of billions of dollars to OpenAI and related infrastructure, and it relies on debt markets and asset sales to finance those commitments. Its shares tend to move by a multiple of the broader chip index when sentiment turns, and recent months have brought repeated double-digit single-session drops in the stock.

The financing question gained weight on Monday, when the chief executives of Intel (INTC) and Broadcom (AVGO) spoke at a financial conference in Singapore. Broadcom's Hock Tan said access to capital could become a bigger constraint on AI expansion than shortages of chips, memory or electricity. Intel's Lip-Bu Tan pointed to the cost of capital and said investors will eventually want to see returns on the money being spent. Both executives still described demand for computing capacity as outrunning supply, a gap they expect to persist for years.

The remarks landed as higher bond yields raised the cost of funding data centers and chip purchases. For a company like SoftBank, which borrows heavily against its holdings, a higher cost of capital reduces the value of its stakes and tightens its room to invest.

Market Reaction

The move was broad but not uniform. Japan's equity benchmark has hit records in recent weeks, led by chip names, which left the market exposed to a sharp pullback. Tuesday's drop pushed the Nikkei back from the highs near 69,000 reached earlier this month and extended the retreat that began the previous week, when SoftBank fell about 6% in a single session.

The retreat in Seoul was sharper than in Tokyo because the Kospi carries a heavy weighting in SK Hynix and Samsung. Taiwan fared better, as TSMC's position as the dominant maker of advanced AI processors has made it less sensitive to the memory competition story.

What Comes Next for AI Financing and Chip Shares?

The next test arrives with the U.S. earnings season, when large chip and cloud companies will update spending plans and demand signals. Strong guidance on orders would support the case that AI revenue can justify the investment. Cautious commentary on capital spending or funding would reinforce the pressure on the AI stocks that rallied hardest this year.

Two variables will matter in the near term. The first is the trajectory of bond yields, which sets the cost of financing for data center projects. The second is whether competition from Chinese memory makers shows up in pricing, which would hit the profitability of SK Hynix, Samsung and Micron. Past rebounds in SoftBank and the Nikkei have followed positive moves in U.S. chip shares, so the direction of Wall Street's semiconductor index remains the key reference for Asian trading.

Outlook

Tuesday's selloff showed how much of Asia's equity strength rests on the AI trade and how quickly it can reverse when funding concerns surface. SoftBank's 8.8% fall and the Nikkei's 2.6% decline reflect a market that has moved from debating chip supply to debating who will finance demand. Earnings from U.S. chip and cloud companies in the coming weeks will indicate whether the cost of capital is changing spending plans.